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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Senator949 who wrote (38951)	12/7/1998 10:28:00 AM
From: Bipin Prasad	Respond to of 97611

Time to take some profits for now. InSook

To: Senator949 who wrote (38951)	12/7/1998 9:34:00 PM
From: David E. Taylor	Respond to of 97611

"If you do your research you'll see this $1.75 still leaves them a penny below the average estimate. So will this really help?" The short answer is "yes". The current (12/5/98) First Call 1999 earnings estimate for CPQ is, as you say, $1.75, and it's this number that many investors (institutional as well as individual) use in determining what the 6 or 12 month forward price "target" should be and whether a stock is currently worth buying or not. But that estimate is the average (mean) of 30 analysts' estimates, which currently vary from a low of $1.40 to a high of $2.00, with a SD of $0.12. So if the analysts on the low side of the mean (like CS First Boston) raise their estimates, the distribution of estimates is shifted to a higher range, and the "average" earnings estimate increases, even if CS First Boston's new number is still below the old mean estimate. What's happening now is a slew of estimate revisions upwards, and you'll see that $1.75 moving up over the next few weeks, along with the associated forward stock price targets. Unfortunately, all these analysts' "estimates" are just that, and CPQ still has to deliver the earnings in 1998 Q4 and 1999 Q1/Q2, or those same estimates will be reduced as quickly as they're presently being increased, with a corresponding depressing effect on the stock price. David T.